All posts tagged Italia

A recent Merril Lynch survey of fund managers found Italian political uncertainty weighed far more on investors’ minds than even the controversial Cyprus bailout. Here Christopher Emsden lays out the hurdles facing Italy’s parliamentarians over forming a credible government.

Investors should rejoice at Italy’s election, because the powerful anti-austerity vote stands to put all of Europe on a more growth-oriented path that is far better than the capital-destroying path it has been on in recent years.

That’s the view of Gustavo Piga, an economics professor in Rome, and author of a landmark study into the use of derivatives by sovereign governments.

“Italian voters have been clearer than Greek, Irish, Spanish, French and Dutch voters so far,” Mr. Piga said.

The demand for growth-friendly policies should be seen as a call for all of the euro area and not just Italy to move toward a policy regime that would seek to boost internal demand in Europe by looser fiscal deficits in Northern Europe and stability in Italy.

Italy’s tax hikes last year could have been channeled to sorely-needed public investment programs rather than improving its primary budget surplus, Mr. Piga said.

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Investors should rejoice at Italy’s election, because the powerful anti-austerity vote stands to put all of Europe on a more growth-oriented path that is far better than the capital-destroying path it has been on in recent years.

That’s the view of Gustavo Piga, an economics professor in Rome, and author of a landmark study into the use of derivatives by sovereign governments.

“Italian voters have been clearer than Greek, Irish, Spanish, French and Dutch voters so far,” Mr. Piga said.

The demand for growth-friendly policies should be seen as a call for all of the euro area and not just Italy to move toward a policy regime that would seek to boost internal demand in Europe by looser fiscal deficits in Northern Europe and stability in Italy.

Italy’s tax hikes last year could have been channeled to sorely-needed public investment programs rather than improving its primary budget surplus, Mr. Piga said.

An Italian voter listening to former Premier Silvio Berlusconi’s electoral program may feel like in a bit of a time warp.

They may be excused if they feel like viewers of the 1980s Back to the Future trilogy where Marty McFly (or actor Michael J. Fox) flips between past, present and future in a question of minutes.

Mr. Berlusconi’s center-right “last great electoral and political battle” pledges of recent days include cutting taxes, reducing labor costs, slashing public waste lowering the number of parliamentarians and eliminating state financing of political parties.

Since Mr. Berlusconi decided to throw his hat into the Italian political arena in January 1994 (yes, that makes it more than 19 years now) he has been repeating the same mantra.

All the talk in Italy is about how the February general election will be decided in the Senate, and in particular how the populous region of Lombardy votes for the upper house.

The Lombardy-as-Ohio trope has emerged because the battleground region is more important this time than in the 2006 and 2008 elections, when Italy staged a two-party battle for government.

This time Prime Minister Mario Monti has allied with centrists to form a third group, while former comedian Beppe Grillo’s Five-Star Movement is polling well into double-digits among voters disgusted by Italian politicians.

The proliferation of coalition tickets means that losing a region is much more punishing than in the past, according to Roberto D’Alimonte, one of Italy’s leading electoral analysts.

Italy’s three-year funding costs fell to a near three-year low at an auction Friday, as the continuing rally in debt offered by weaker euro-zone countries outweighed the impact of political uncertainty ahead of the country’s election next month.

The Italian Treasury sold its maximum targeted €5 billion ($6.56 billion) of three-year fixed-rate bonds, or BTPs, and two 2017-dated floating rate notes, known as CCTeu, indexed to six-month Euribor rates, the Bank of Italy said.

The Treasury offered €2.75 billion to €3.5 billion of the BTP, and a combined €1 billion to €1.5 billion of the two floaters.

“As expected, following Spain’s successful issuance earlier in the week, this was a strong auction result and is in line with the recent theme of a strong performance by peripherals,” said Rabobank strategist Lyn Graham-Taylor. “These successful auctions are providing a challenge to our call for a first quarter Spanish bailout which is starting to look premature,” Mr. Graham-Taylor said.

To the surprise of many, the media billionaire took part in La7 broadcaster’s current affairs show hosted by one of his biggest critics, Michele Santoro.

Many were expecting Mr. Berlusconi to walk out of the “Servizio Pubblico” show, but he stayed firmly put. He kept a cool head and gave back to the anchorman as much as he got without losing his characteristic smile and sway.

In fact, the only time it turned into a shouting match it was mainly Mr. Santoro that was doing the screaming. Mr. Berlusconi, who pushed out Mr. Santoro from state-owned television while premier in 2002, even mocked the presenter by asking if he was going to walk out of his own program.

No doubts Mr. Berlusconi went through some serious coaching to prepare for the fight. The media mogul-turned-politician proved that he is still the perfect salesman and the most eloquent speaker among Italian politicians.

Mr. Berlusconi, who is trailing the center-left bloc and has been on a media offensive to bring back some of his disillusioned supporters into the fold, probably managed to bag some new votes for next month’s general elections from Thursday’s TV performance.

What did Mr. Santoro and La7 channel–a dwarf compared to state-owned broadcaster RAI and Berlusconi’s Mediaset empire–get? More than 8.5 million viewers and 33.6% of audience share during prime time: a record.

Blue-collar workers are shifting left while the unemployed are moving to the center of the political spectrum.

That is a critical trend among Italy’s electorate, uncovered in a little-noticed study done last year by CISE, the Italian Electoral Studies Center, a research division in Rome’s Luiss University.

CISE asked 1,524 voters last spring and again late last year where they placed themselves on the political spectrum. All in all, the study’s lead author Nicola Maggini acknowledged, there’s not much change, reflecting what is widely seen as a strong loyalty tradition among Italian voters.

A third of Italians identify themselves with the left, just under 30% with the right, a quarter with the center and one in seven declare themselves unaligned, the survey found.

But the study went further, breaking down the sample by their economic status, and there a notable shift emerged that in many ways testifies to the impact of the technocratic government led by Mario Monti in 2012.

Italian newspapers ran banner headlines Monday reporting the victory, as expected, of Pierluigi Bersani in a primary election held to select the Democratic Party’s lead candidate for national elections to be held early next year.

Left-leaning La Repubblica even had a page about the inevitable path of Mr.Bersani, a pipe-smoking pragmatist who cites a pope as his hero and calls himself “moderately” in favour of his own ideas, to Palazzo Chigi, the prime ministerial office currently held by Mario Monti.

It may not be so simple.

Italian politics is currently, as always, in a state of flux, but one likely outcome of Mr. Bersani’s triumph is that Silvio Berlusconi could rejoin the fray.

Mr. Berlusconi has always loved depicting his adversaries as communists, and Mr. Bersani was a member of the Italian Communist Party, which began a series of names changes in the early 1990s leading to the Democratic Party today.

Not that the media magnate has any chance of winning the vote and returning to haunt Europe’s political scene with his impish antics. A recent poll showed that almost half of his own People of Liberty party’s voters don’t want him to run.

But the others? A poll published Sunday by ISPO in Corriere della Sera found that internal division could benefit the center-right. In short, if the People of Liberty and a new list led by Mr. Berlusconi both run, they’ll win more votes than if they stay intact.

That won’t be enough to produce a winning coalition, but it would likely chip away at the Democratic Party, which surged to 30% in an SWG poll of voters’ intention late last week.

And that would be enough to assure that the spring election doesn’t produce a winner – a condition more or less set down by Mr. Monti as a requirement for him serving a second term.

Much depends on how Mr. Bersani and his defeated challenger, Matteo Renzi, the 37-year-old mayor of Florence who ran on a middle-class platform of generational change, cooperate from here.

The former boy scout won accolades for his classy concession speech late Sunday. Allies of Mr. Bersani, meanwhile, including some singled out by Mr. Renzi were quickly busy nominating each other for eventual ministerial positions.

With an unusual 41% of voters saying they are undecided, and with a protest movement led by comic Beppe Grillo polling 20%, Mr. Bersani’s victory could prove Pyrrhic.